British economy bigger than any time in history after 0.8% surge in growth

Britain’s economy is bigger than at any point in its history after a 0.8 per cent surge in growth finally lifted GDP above its pre-financial crisis peak.

The achievement was hailed as “a major milestone” by Chancellor George Osborne and officially brings to an end the most prolonged slump on record.

The solid rise in the second quarter of the year was in line with City forecasts and means that output is now 0.2 per cent higher than at the start of 2008 when the recession began.

But critics of the Government’s economic strategy said most people in Britain are still worse off than they were before the credit crunch and said the country has taken far longer than some of its competitors to recover the ground lost to the post-Lehman financial maelstrom.

Shadow Chancellor Ed Balls said: “At long last our economy is back to the size it was before the global banking crisis — three years after the US reached the same point.

“But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed this is no time for complacent claims that the economy is fixed.”

But most City economists said the fifth consecutive quarter of solid growth showed that Britain’s recovery was robust and likely to be sustained, although interest rates look certain to go up over the winter.

Jeremy Cook, chief economist at currency company World First, said: “The recession prompted a renewal of the phrase “Keep Calm and Carry On” and all in the UK will be hoping that this expansion does just that.”

GPD is now rising at an annual rate of 3.1 per cent, the best since the end of 2007 just as the credit crunch was starting to bite.

Today’s landmark represents a remarkable turnaround after a six year downturn and comes only 18 months after economists feared that Britain could be heading for a record breaking “triple dip recession”.

But Britain is now predicted to be the fastest growing major world economy this year and yesterday the International Monetary Fund raised its GDP forecast for the fourth time in a row to 3.2 per cent.

Mr Osborne said: “Thanks to the hard work of the British people, today we reach a major milestone in our long-term economic plan.”

“But there is still a long way to go — the Great Recession was one of the deepest of any major economy and cost Britain six years. Now we owe it to hardworking taxpayers not to repeat the mistakes of the past and instead to continue with the plan that is delivering economic security and a brighter future for all.”